So. Since the last time I posted, the duplex has begun to resemble less of an overgrown, vacant lot and more like, well, a duplex.
It is almost totally framed inside, under roof, and we’re starting the HVAC this week. Windows will go in Monday and we’ll also start electrical and plumbing work.
I have plans to come back here regularly now, now that things are a smidge less hectic and things are actually happening. But for now,we’re excited things are steadily moving forward.
We went from this:
… the excavator is digging the foundation!!!!!!!!!
There has been a lot going on and a lot to update here and I’ll be back next week with regular posts, as things are finally up and going. But for now, it’s finally, FINALLY happening.
I’m not going to use the W word in this post.
Things are still … delayed. We are … passing the time until the city decides to get off their butt and approve our permits FTLOG. The excavation company is ready to go, the concrete company is ready to go, the basement waterproofing company is ready to go and we are still … holding our horses.
Oh lord. I don’t even know where to start. We’re breaking ground Monday! Yay! That’s good news. But let me tell you, two weeks ago we had A WEEK.
First of all, Chip spent all of Labor Day weekend over at the lot, clearing brush, cutting down trees and feeding it all through a chipper. We rented the chipper for about $400 and a dumpster for about $400 and it was totally worth it. Otherwise, we would have been hauling firewood for approximately 3,000 years.
That same week we also secured insurance for the lot and the building. Or so we thought. We found out Tuesday that this particular company wouldn’t cover us (*cough*SHELTERINSURANCE*cough*) because last year we made a claim on Chip’s truck for hail damage and in 2009 we made a claim because our house got broken into and a door and the stuff that was stolen needed to be replaced. Which is so amazingly STUPID as neither claim was even remotely our fault and has NOTHING AT ALL to do with building a duplex. But. We have insurance now so it doesn’t matter at this point, but still. More work. More frustration. Blah blah blah.
Now here is the part where I tell you about how everything almost fell apart and we almost didn’t build the duplex at all. We live in a town that is home to a college with an ever-increasing enrollment. There isn’t enough housing on campus for the kids that want it, which was kind of the whole point of us doing this. We will never want for renters. Or so we thought.
On September 1, there was an article in the paper about a $20 million apartment complex that is going to be built a mile away from campus. It is going to offer furnished 3-bedroom apartments for $575 (at least, that’s how the article read). This includes utilities, a pool, workout room, etc.
So we FREAKED OUT. There would be no way for us to compete with $575 rent. We made phone calls to people in town, and I did some more research online. As it turns out, rent is $575 PER PERSON. So, phew. Also, there are rumors that the complex is going to have RA-type people, and that you won’t be able to pick your roommates.
So, considering that the rent we were hoping to get will be about $200 less PER PERSON and they’ll truly be living on their own, I think we’ll be okay. But I would still like to pose the question-
When you were in college, would $200 in savings per month have swayed you go with a duplex or is the pool and stuff too tempting?
In other news, we’re STILL WAITING to break ground. This time, we’re waiting on permits from the City. I tell you, I am going to need some pills or something.
Yep. Still waiting. Mostly. Remember how I was so excited that we had someone who was going to help us with the plans for free, provided we bought all the lumber from his company? Well. That’s a great idea in theory. Provided that the person actually does what they say they will.
This guy did do the plans. But it took forever. He did help us get the permits on file. But it took forever. Now, the permits are (hopefully) on their way to being approved. Chip has started clearing the lot of trees and brush. Yesterday we were lucky enough to have the help of a good friend who has a family member who owns a bucket truck. They spent a couple of hours at the site last night cutting down a few big trees we needed to get out of the way. Chip will continue to work on that this week and next, in the hopes that we can break ground on the foundation when he’s done.
We have gotten quite a lot of “stuff” done in the last week, though. We rented a big old trash bin, rented a chipper for all of the wood and brush Chip will be clearing out, got the permits filed, and started clearing out the lot. Not too bad considering we’ve spent so much time sitting on our hands, waiting.
Yesterday I caught a glimpse of how stressful this project might become. Chip was (rightfully so) aggravated by the lumber yard guy’s taking so long to do what he said he was going to do. I mean, we understand he is doing it for free. But if you offer to do something for free, and you can’t do it in the timeframe we need it done in, it’s okay to just let us know. We could have filed the permits with the city wrong three times before he got it done once.
But I think that’s going to be a big part of this game. Waiting. (I don’t ever want to type the word waiting again.) We are just going to have to learn not to stress out during the times we know that we’ve done all we can do and it is in someone else’s hands. It’s not going to be easy, but I think it will relieve a lot of personal stress if we can accept the fac that we can only do so much.
So! I’m off to … wait some more.
We did it. The closing went off without a hitch. As we were walking out of the title company’s office, Chip and I just kind of stared at each other, laughed awkwardly and raised our eyebrows (that’s Chip and Kristina Marriage-Speak for HOLY SHIT). I said, “So that just happened.” And then we laughed for approximately five minutes at nothing, because it wasn’t a funny thing to say, but I don’t think we knew what else to do.
We just bought a piece of property. And now we have to be in charge of building something on it. We just incurred another mortgage.
We’re excited. Now the real
stress work begins. This week, we will get the permits ready to submit to the city. Once the mortgage has been recorded, we can submit the permits and once they’re approved, we can break ground.
Our closing was really informative. We weren’t sure how we would actually “withdraw” money to pay people. As it turns out, it all goes through the title company. They are, essentially, holding the loan money in escrow and will disperse it upon our request. We provided them with a breakdown of all the bids so they will know, roughly, what to expect.
So, here’s how it will all go down: let’s say we hire someone to dig the foundation. They submit a bill to us. We submit the bill to the title company. The title company submits a check request to the bank. The bank gives the title company a check. The title company pays the foundation guys. It was a nice surprise to find out that we were going to have the bill-paying taken off our hands.
This process basically ensures that we are a) using the money for what we say we’re using it for and b) making sure everyone gets paid on time so no one puts a lien on the property, which would prevent the bank from moving our construction loan into a fixed mortgage at completion of the project.
The title company also makes sure that the contractors use the money they’re given to pay for the material. She told us this awful story about one woman they worked with who paid some concrete guy like $30,000 (which included labor and materials) out of her own pocket to do some work around her house. As it turns out, he never paid the concrete company for the material, so the concrete company put a lien on her house, and she had to pay them for the concrete. Basically, she paid for materials twice. We definitely don’t want that to happen.
We also found out how we will be making payments on our loan throughout the course of the building process. Here’s a little run-down of how the financial part of a construction loan works:
Basically, the bank gave us a loan for 80% of what the duplex in its completed form will be worth in today’s market. So we have that amount of money with which to build it (we had the option of putting down the other 20% as a down payment. We’re hoping to cut corners and do enough work ourselves that we can build that 20% right into the building and not have to come up with any cash.) We also bought the piece of property with money from that loan, so everything will be wrapped up in that loan.
For ease of understanding, I’m just going to pretend our loan was for $100,000 (I WISH.)
You get a certain amount of “draws” that you can take from your construction loan. I think it is typically six. That means that six times over the course of building, you can withdraw money to pay contractors. Then, you pay the interest (spread out over the length of the loan) on however much money you’ve taken out.
So, let’s say you take out $20,000 on your first draw. You will pay interest (our interest rate is 5%) on that $20,000. So (and bear with me, because math is NOT my strong suit) 20,000 x .05 = 1,000. The length of our loan is one year, so you take $1,000 / 365 = 2.74 (this is the per-day figure for interest on a year-long construction loan, so you would multiply that by 30 for your monthly payment) 2.74 x 30 = 82.20.
So your first payment on your loan would be about $82.00. Then, if your second draw is another $20,000, you can add another $82.00 to your monthly payment, and so on and so forth, using the same formula above for each draw.
I think I explained that right. Probably not, but I’m sure no one is paying close enough attention anyway.
For now, we’re back to waiting. The mortgage has to be recorded and the permits filed before we can break ground. We might contact the power company to run electricity to the site, but other than that our hands are tied (again) for the moment.
But now that we’ve got the loan and we own the property, it finally feels real. We’re doing this.
No turning back now!
About 10 minutes after I posted my last post, I received an email from the bank stating that we were ready to go! We scheduled the loan closing for Monday (yesterday) at 3:30 and the closing on the property for today. We proceeded to have a wonderful weekend and after some shuffling around of Pre-K classroom visits (my BABY is starting Pre-K tomorrow which means he will be in KINDERGARTEN next year, OMG) we prepared to finally take the first solid step in the process yesterday afternoon.
Then yesterday at about 2:00 pm I got an email stating the title company could “no longer accommodate our closing for today” [Monday] and can we come in Wednesday at 2:00?
So after some MORE shuffling and some finagling on the part of our bank guy which I still don’t understand, we are now closing on both the loan and the property today at 4:00.
Chip and I have bought 4 homes and refinanced twice. We’ve never had a closing move around on us this much. I know it happens a lot, but it’s been beyond frustrating. I think it’s a combination of working with the bank, the seller of the land, and the title company and everyone trying to get their stuff straight and accommodating everyone’s schedule as much as possible. At least I hope that’s it and it’s not an indication of someone’s incompetence. Hopefully it’s all figured out now and the closing will go off without a hitch this afternoon.
I’m nervous and excited and nervous. After today, there won’t be any turning back. We’ll be committed and we’ll have to see this thing through.
Yesterday Chip talked to the company who is going to dig the foundation and confirmed that they’ll be available for the job. Today we priced brick for the retaining wall we’re going to have to build in the backyard. We are going to take our first draw on the loan today to get the money to set all of this in motion. I still don’t fully understand how the financial part of having a construction loan works, but Chip gets it so I’m going to have to have him explain it to me for the 54th time (math is NOT my strong suit) and I’ll report back here.
We also have to figure out how to apply for building permits which seems very complicated and I’m not looking forward to sifting through all of that.
So it’s really happening. Today. Send wine!